02 July 2010

Google to challenge fare comparison sites

Google is expected to mount a challenge to the likes of Expedia, Orbitz and lastminute.com after snapping up travel technology company ITA Software in a $700m deal.

ITA provides the technology that drives several airline reservations systems, which could help Google to improve the quality of its search results when people are looking to book flights or even package holidays.

Google chief executive officer Eric Schmidt said: "There is clearly more room for competition and innovation in online travel, we will improve the way flight information is organised."

Schmidt claimed the biggest winners in this deal would be consumers, but he also predicted Google would be able to drive more traffic to airlines and travel agencies.

Microsoft announced its intention earlier this year to break into the UK market with its own fare comparison website, Bing Travel, launched in the US a year ago.

Bing Travel, which also compares hotel rates, is able to predict price fluctuations, enabling travellers to work out when is the best time to get the best deal.

Google's takeover of ITA is likely to be scrutinized by US federal antitrust regulators, given that Google is already the internet's most powerful company.

The Federal Trade Commission conducted a six-month review before approving Google's last big acquisition, a $750 million takeover of mobile ad service AdMob.

Google did not say when it expects the ITA deal to be finalised. Shares in Google rose 41 cents to $439.90 on Thursday after the announcement.

By Linsey McNeill